Encana announces strong 2Q16 results

Encana's focus on execution excellence during 2Q16 has delivered significant efficiency improvements and returns. To achieve these results, the company has lowered cash costs, such as transportation, processing and operating expenses, and improved capital efficiency in its updated 2016 guidance. In light of efficiency improvements, Encana is also raising its 2016 production guidance. The company intends to use proceeds from announced dispositions to further strengthen its balance sheet and increase its capital investment into high return opportunities in its core four assets.

Highlights from the quarter include:

Cash flow up over 75% from the previous quarter to US$182 million or US$0.21 per share.

Operating earnings of US$89 million or US$0.10 per share, up from a first quarter operating loss of US$130 million or US$0.15 per share.

95% of capital invested in high return wells in the core four assets; the Permian, Eagle Ford, Duvernay and Montney.

Maintained scale in the core four assets which delivered 268 300 boe/d, representing 73% of the company's 368 300 boe/d total production.

New Permian 14-well pad peaked at 12 000 boe/d and is currently producing over 10 000 boe/d gross.

Announced Gordondale and DJ Basin divestitures are expected to close by the end of July 2016.

"We are one of the lowest cost, highest performing operators in each of our core four plays," said Doug Suttles, Encana President & CEO. "Our success in capturing significant capital efficiency gains continues to increase our returns. By reinvesting savings and modestly increasing capital, we are adding 50% more drilling and completions activity to our 2016 programme."

"We expect to use proceeds from announced divestitures to strengthen our balance sheet and modestly increase our 2016 capital programme. We anticipate this additional activity will deliver approximately 13 000 boe/d of production from our core four assets in the fourth quarter of this year and between 30 000 to 35 000 boe/d in 2017, of which approximately 75% will be liquids," added Suttles.